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EU Swap Rules to Cost Banks Billions

Proposed rules for over-the-counter swaps transactions are projected to require collateral of between 200 billion and 420 billion euros.

By Silla Brush, Bloomberg | Updated on March 08, 2016

Europe’s biggest banks will need billions of dollars to meet collateral requirements for derivatives, starting this year, under the latest version of a key rule that seeks to reduce risk.

The standards, which will be phased in from September this year, may require EU buyers and sellers of swaps to set aside between 200 billion euros (US$220.5 billion) and 420 billion euros in total once they are fully effective in 2020, three European regulators said on Tuesday in final draft standards. The requirement aims to stiffen standards for swaps contracted directly between traders rather than being settled at clearinghouses.

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